Michele, I'm so sorry for flip flopping. This thing is proving quite hard to debug.
As a matter of fact, the ajax Form was never working correctly. On submission, it reloads the entire page instead of just the target div and divs touched by the success callback. I didn't notice at first because the divs are getting updated so quickly, but on a bigger example with more to download into the target divs, I saw that an extra div was getting loaded. Grrr! I'm still mucking around with it to see what's going on, but I seem only to be making matters worse, not better. And yes, response.flash and session.flash don't work so I have to do the flashing all by myself. :-( Components and uploads/form submission just aren't ready for prime time IMHO.